‘First Homes’ is a new government initiative in England that aims to help local first-time buyers and key workers secure a place on the housing ladder by offering discounts of up to 50% on new-build homes. The scheme should account for at least 25% of all affordable housing units delivered by developers through planning obligations.
What are ’First Homes’?
The government describes First Homes as a specific kind of discounted market sale housing that should be considered to meet the definition of ‘affordable housing’ for planning purposes.
First Homes must be discounted by a minimum of 30% against the market value, and are only to be sold to buyers meeting the First Homes eligibility criteria.
After the discount has been applied, the first sale must be at a price no higher than £250,000 (or £420,000 in Greater London).
Maintaining their discount.
On their first sale, First Homes will have a restriction registered on the title at HM Land Registry ensuring this discount (as a percentage of current market value), together with certain other restrictions, are passed on at each subsequent title transfer.
Passing on the discount to future buyers protects these homes from being sold on at an inflated value if asking prices rise in the local area. So someone buying a home with a 30% discount will also be required to sell it for 30% lower than the market value at that time.
The landowner should also enter into a planning obligation under the Town and Country Planning Act that secures the delivery of the First Homes, besides ensuring that a legal restriction is registered onto a First Home’s title on its first sale.
Who is eligible for First Home purchase?
Purchasers of a First Home should be a first-time buyer as defined by the Finance Act 2003 for the purposes of Stamp Duty Relief for first-time buyers.
Whether individuals, couples or group purchasers, they should have a combined annual household income not exceeding £80,000 (or £90,000 in Greater London) in the tax year immediately preceding the year of purchase.
They should have a mortgage or home purchase plan (if required to comply with Islamic law) to fund a minimum of 50% of the discounted purchase price, and these national standard criteria should also apply at all future sales of a First Home.
With the large number of first time buyers currently entering the housing market, and the availability of lower deposit mortgages, anyone interested in this scheme would be well advised to get their application in early.
For more advice on preparing your property for sale, just give us a call on 01782 622 677, or email email@example.com.